2 About Closure Process

This topic describes about Closure Process in the Facility Closure.

Liability / Facility closure is the process of closing / canceling a single or a group of facilities / liability offered to the corporate customer. This process can be initiated by both the bank as well as the customer under certain circumstances.

The circumstances under which the customer initiates Closure process include:

  • The facility is no more required by the customer
  • The customer is offered with higher amount of facilities from the competing bank
  • The customer is offered with similar amount of facilities at a better rate of interest from the competing bank
  • The customer is unable to repay the outstanding amount, thus decided to liquidate the collateral and close the facilities

The circumstances under which the bank initiates Closure process include:

  • The customer is unable to repay the outstanding amount, thus the bank has decided to liquidate the collateral
  • Worsening of the financial performance of the customer
  • The customer breaches the covenant or Terms and Conditions set by the bank
  • Maturity of the facility as per its natural course
  • The bank has discontinued the sanctioned facilities, tenor, rates, etc.
Process Flow Diagram

The flow diagram illustrating various stages in the Closure process is provided below for reference:

Figure 2-1 Process Flow Diagram

Description of Figure 2-1 follows
Description of "Figure 2-1 Process Flow Diagram"

The Closure process in OBCFPM has the following stages:

  • Initiation
  • Validation
  • Approval
  • Customer Notification
  • Manual Retry

Refer each chapter in this book for information on the stages in Closure process.